Yesterday, the U.S. Supreme Court ruled that the Federal Arbitration Act preempts state laws that limit class action waivers in arbitration agreements (AT&T Mobility LLC v. Concepcion).
What Does This Mean?
While Concepcion isn’t an employment law case, it could have a significant impact on the workplace. Employment lawyers will no doubt argue that employers can now avoid class actions by requiring employees to sign arbitration agreements that require resolution of claims on an individual basis.
Should We Change Anything?
Should employers rush off and require all employees to sign arbitration agreements? Maybe. Many have refrained from doing so because arbitration is getting more and more expensive and more and more like actual court litigation. However, this ruling could be the tipping point for companies concerned about the recent class action crescendo described previously here.
Many employers will wait to see how the Supreme Court rules in the mammoth Dukes v. Wal-Mart class action before making sweeping changes. Some are speculating that the Court’s ruling in Concepcion signals that it may use Dukes to impose further restrictions on the class action process. That decision is expected in July.
What About the Arbitration Fairness Act?
The Concepcion decision could reopen debate on passage of the Arbitration Fairness Act, previously discussed here. The AFA would prohibit agreements mandating arbitration of employment disputes (as well as franchise and consumer disputes). Most believe that passage of the AFA remains a long shot, however.